Posts Tagged ‘Deepwater Horizon’

BP plc, formerly British Petroleum, nee Anglo-Persian Oil Company, may be coming to the end of the long, rocky road toward ultimate settlement for damages relating to the 2010 Deepwater Horizon explosion and blowout. The proffered $7.8 billion settlement to the various parties to an enormous class-action suit currently meandering its way through the Eastern District Court of Louisiana must, like most class action settlements, be approved by a judge before the money actually goes out and the claims are settled. Misleading news headlines report that the Department of Justice is formally accusing BP of “gross negligence” in a new brief filed this week, but when you read the DOJ’s brief and come to understand the procedural issues at stake in the new brief, you’ll see that it’s actuallyBP that is making an accusation to which the DOJ is responding. Namely, BP’s accusation is that it was not grossly negligent in handling the events leading up to and following the Deepwater Horizon disaster.

Firstly, the Department of Justice is not opposed to the $7.8 settlement to quiet the plaintiffs in the class-action suit; indeed, while the settlement was not strictly made between BP and the DOJ, the DOJ maintained a close eye on the negotiations and had many opportunities to step in and press-gang plaintiffs into pursuing stronger settlement terms or even a trial, none of which it took. They have taken no steps to intervene in the settlement, nor should they, since the settlement represents a good-faith negotiation between attorneys’ plaintiffs and the defendants.

Secondly, the DOJ’s memorandum filed this week is actually a response to a recently-filed BP memorandum, not a motion in and of itself. BP’s recent memorandum calls for the judge overseeing the settlement order to make a finding that BP was not grossly negligent in the Deepwater Horizon disaster. This is the ‘Hail Mary’ pass to which the title of this post refers. A little procedural background, first.

As I’ve said, a judge must approve whatever settlement ultimately emerges in many class-action settlements. That is because the procedural law of United States courts treats class-action lawsuits as being fundamentally different from individual or small group lawsuits. And rightfully so: class-action lawsuits can involve thousands or tens of thousands of parties, each of whom individually has a completely different set of facts that bring them to court. For example, in the instant case, both an oyster fisherman whose business was harmed by environmental damage to the Gulf and the owner of a tourist beach resort whose shores were damaged by tarballs washing up on her shore might have claims against BP, but those two parties have radically different harms to themselves, with claims as factually different from each other as the sea is from the shore. But both parties’ grievances clearly stem from the same cause, namely the Deepwater Horizon explosion (and potentially the gross negligence that led to it; we’re getting there), so it’s just more efficient to glue their cases together and press them both against BP at the same time.

When lots and lots of seemingly different cases start getting glued together into a single action, it becomes time to give serious thought to a class-action suit. Unlike a regular lawsuit, where one party files their complaint, the other party responds, and battle begins under the neutral eye of a court, a class-action lawsuit requires certain positive interventions by the court in order to be allowed to proceed. For example, the court must certify the class, meaning that the court determines that the current action adequately includes most or all of the potential parties to the suit, since the whole point of the class-action (efficiency) is lost if straggler plaintiffs keep filing their own cases after the class-action ends. The court wants to minimize the number of stragglers. But the court also doesn’t want to force people into the class-action suit who don’t want to be there (maybe they don’t trust the lawyers handling the case, or maybe they just think that they’re in a unique position to get a better reward than they could through the class-action), so the court must make sure that an adequate opt-out procedure is in place for those people that want to be those straggler plaintiffs.

And the kind of intervention the court is faced with now is reaching into the deal reached between the parties and approving the settlement. This is the step that the BP settlement has reached, and it is from this position that the long arm of the BP legal team is reaching back to hurl its Hail Mary. In approving the settlement offer, the court must issue a written decision, and the BP memorandum to which the DOJ is responding is urging the Eastern District Court of Louisiana, the current home of the class-action, to include in its approval document the assertion that BP was not “grossly negligent” in its operation of the Deepwater Horizon spill.

Now, why does this even matter? Isn’t the case coming to a close anyway? Isn’t that the whole point of BP’s settlement – to end the lawsuits? Not quite. The settlement BP has reached is purely on the damage caused by the explosion of the rig. The current case involves no accusations whatsoever of misconduct amounting to gross negligence on BP’s part; the plaintiffs are essentially only alleging that “BP hurt me, and I want them to fix me.” What BP wants is language in a court document somewhere, anywhere, saying that “BP was not grossly negligent.” That’s because it is in subsequent cases that allegations of gross negligence will be made, probably when larger parties and state actors like the EPA and the DOJ itself, with more far-reaching investigatory powers, will have better access to the information needed to build a case that BP failed to exercise “ordinary care” in following safety regulations and its own internal safety procedures.

These future efforts are distinct from either the present class-action case or the stragglers from it, since the present class action is addressed merely to the fact that BP equipment harmed a lot of people and did a lot of damage to the economy and environment of the Gulf of Mexico. The case is built just on that fact alone, not on findings about the actual behavior or misbehavior by BP officials.

BP’s Hail Mary pass is to preempt all of these future actions and to close off any discussion of its ultimate negligence or even gross negligence by having the Louisiana court find now, in approving the nearly $8 billion settlement at hand, that BP did not act grossly negligent. The DOJ correctly advises the court that since such allegations are not a meaningful component of the present case, it would be inappropriate for the court to go out of its way to make such a finding, a finding which civil procedure requires to be done in a separate hearing or set of hearings, possibly even in a completely separate case or class-action. Essentially, BP wants a favorable ruling today on a case that starts tomorrow, opportunistically manipulating the good-faith settlement process into getting language from a judge foreclosing on future efforts to rectify harms that might have been caused by sloppiness, stupidity, or even maliciousness in BP’s quest for cheap domestic oil as fast and as abundantly as possible.

And thirdly, BP is making as a backup claim that its several co-defendants (the various subsidiaries and contractors responsible for building and installing the actual Deepwater Horizon rig) managed the rig in a way that so attenuated BP’s management of Deepwater Horizon that BP isn’t even responsible for what happened in the first place, regardless of any negligence on its part. In short, BP wants the court to make, again without any evidence or formal hearings on a point that isn’t being pressed by either side in the actual settlement negotiations, that BP was so distantly involved in the Deepwater Horizon disaster that its own care or negligence aren’t even candidate questions for future lawsuits. In shorter, BP wants to throw its business partners under the bus to save its own neck.

This disingenuous claim invokes a nuanced understanding of agency law, and questions about whether BP’s subsidiaries and contractors were ever “agents” of BP (in which case BP would be bound by their official acts in the ordinary course of business) or not. But the long and short of it is that, while the rig was working properly, BP was happy to draw enormous income from its thousands of barrels a day of oil production, but now that it actually comes time to take responsibility for the consequences of the rig, it wants to act like it was just watching the whole operation from a helicopter’s-eye view.

So as you read the news, remember these takeaways:

The Department of Justice is not now, and has never, formally accused BP of gross negligence.

The Department of Justice wants you to have the right to press BP for gross negligence in the future.

BP wants a court to rule, in complete absence of any evidence on the point in a case completely unrelated to the allegation, that BP showed proper care in its oversight of the greatest environmental catastrophe in human history.

BP wants to show other major energy companies that an end-run around the procedural rules of American courts is both easy and profitable.

BP wants to sacrifice its own business partners to protect itself from taking responsibility for its mistakes.